The Chinese authorities plan to gradually rebalance the composition of Chinese economic
growth from investment towards household consumption. This article uses the
World Input-Output Database (WIOD) to give a general sense of how this rebalancing
might affect Australian exports and economic activity. Dollar for dollar, Chinese
investment appears to absorb more than twice as much Australian value-added
output as Chinese household consumption. This largely reflects the significant
role of resource commodities in Australia's exports to China, which are
used more intensively in investment than consumption. Simple analysis using
the WIOD suggests that a shift from investment to consumption in China is likely
to weigh on the growth of demand for Australia's mineral resources, although
a rise in demand by Chinese households for food products and services could
provide some offset.